The Stingy Cities That Kick In the Least To Social Security

We all help pay for Social Security, but we don’t all help pay for it equally out of our paychecks. As a result, this can mean whole cities – depending on the local economy and the types of jobs that cluster there – don’t kick in equally, either.

Today, employees and employers chip in payroll taxes to this safety net on annual earnings of up to $110,100 (that figure goes up modestly every year, depending on growth in average annual earnings). If you’re lucky enough to make a lot more than that – let’s say you’re an investment banker – you only have to pay Social Security taxes on your first $110,100. If you make less than that – if you’re a school teacher, a coal miner or a secretary – you wind up paying Social Security taxes on your entire annual income. The richer you are, in other words, the less you contribute as a share of your income. The poorer you are, well, here’s another reason that life seems unfair.

Now, some communities have a lot more rich people than others. And so, not surprisingly, when Urban Institute researcher Richard Johnson started to run the numbers on the counties that contribute the least to Social Security as a share of local earnings, this place popped up as the stingiest: Manhattan.

Only 47.7 percent of the earnings of people who live in Manhattan were taxed for Social Security in 2009. The national average that year was 82.2 percent. This means that more than half of all the money earned by Manhattanites in 2009 went to people clearing more than $106,800 a year (that was the Social Security cap three years ago). The next county in line? Fairfield, Connecticut, better known as the place where lots of wealthy people who work in Manhattan sleep.

Johnson looked at the 100 largest counties in America by employment and came up with these 10 bottom-feeders:

As for the counties that contribute the most, as a percentage of local earnings? The Bronx and Queens, respectively, top that list. Almost everyone there is paying Social Security taxes on all of their income. Or, put another way, there aren’t too many investment bankers and hedge fund managers living in the Bronx. Working-class metro areas like Detroit (Macomb and Wayne counties), Indianapolis (Marion County), and Kansas City (Jackson County) also help out above and beyond the national average.

It wasn’t always this way, Johnson points out. In the early 1980s, 90 percent of all earnings in America were subject to Social Security taxes. But as a larger share of wealth has now shifted into the hands of a smaller group of mega-rich folks (as the Occupiers have been complaining), this disparity in who pays what for Social Security has grown wider as well. That gap between Manhattan and the Bronx, in turn, is making the program's pending crisis worse. The Social Security Administration itself estimates that if we went back to taxing 90 percent of all earnings in the country for Social Security, that would address as much as half of the imbalance between the number of Americans expected to retire and the number of workers paying into the system.

About the Author

Emily Badger is a former staff writer at CityLab. Her work has previously appeared in Pacific Standard, GOOD, The Christian Science Monitor, and The New York Times. She lives in the Washington, D.C. area.